Bush oversees largest increase in federal spending in 35 years

I agree, and I hope that Bush win's rather handily so that he will be able to take the politically unpopular steps that would put us on the path to long term growth. Unfortunately I'm sure there will be so many accusations of "heartless" Republicans, that Bush will not be able to make the cuts in spending that should be made.

 

The steps that would put us on the path to long term growth aren't politically unpopular. We had an unprecedented period of economic expansion, along with budget surpluses, under the Clinton administration, and Clinton was politically popular (with the exception of the demagogues, who wouldn't have liked Clinton if he walked on water which he subsequently turned to wine).

In other words, what are you talking about?

 

Well, as you pointed out, tax cuts that encourage companies to provide healthcare could actually save the government money in reduced health care expenditures.

Like I said, I would need to know the details, but this type of tax cut could almost be revenue neutral if it has a large effect on unemployment and the uninsured.

 

I do not think Clinton even began to look at the issues concerning spending that we need to address to guarantee long term growth, and that is why he remained popular, and that is why the economy was starting to turn south just as he was leaving office.

 

Let's think about Bush and his administration's mismanagement of things economic.

- tax cut during war time
- increased non-military discretionary spending
- record deficit spending
- continued expansion of the monetary supply

Let's think about his management style.

- only gets news that is filtered by his staff
- rejects information requests from democrats
- very dedicated to maintaining relationships with his patrons
- very clear about intentions going forward, regardless of how the situation changes

He won't change anything if he has a second term. Expect more deficits. Expect more pork distributed to his patrons. Expect the tax cuts to become permanent. Expect increased Medicare spending for prescription drugs. Expect more military aggressiveness.

 

Ugg.

Bush would rather grant a tax cut than pay down the debt.

I think that was not the wisest choice, but blaming Clinton for the downturn and praising Bush for the upturn is kind of a joke.

Gringo's point is well taken. This is a spend and give tax relief to the wealthy president. If you are a conservative, and you dig that, great. If you find irony in it, fine.

 

I'm going to take your post in reverse:

The economy was going to turn south eventually no matter what Clinton did or didn't do because, wait for it, you've heard it before, THE ECONOMY MOVES IN CYCLES. We just didn't have a recession for a very very long time, and it happened during a Democratic presidency. I'll let you make of that what you will.

Clinton's popularity, if you wish to tie it to the economy, probably had more to do with the fact that Americans enjoyed more net worth during his presidency that say, during Bush's presidency. Especially the ones who were working when Clinton was president and aren't working now.

Finally, you started by saying that long-term growth can only be accomplished by increased federal spending (as opposed to, say, increased spending in the private sector), that a dollar spent by the federal government will be used more efficiently than a dollar spent by other entities. Congratulations. You're a Democrat.

 

The economy went south in 2000 and 2001 because

- dot.com bubble burst
- over-capacity, especially in telecoms
- corporate fraud, primarily on false revenue recognition, improper (hidden) off-balance sheet debt and misuse of corporate resources

9/11 delayed any chance of recovery in 2002, due to the uncertainty and risk management issues facing many managers.

None of this has anything to do with what actions either Clinton or Bush undertook. Given that these are the realities of the current administration, they really need to control spending or raise taxes as the dot.com bubble burst unexpectedly cut federal revenues. Over-capacity is best left to markets and not government intervention. On the last point, the Bushies really need to try to enforce the securities and fraud laws. Confidence needs to be restored in the public equities space.

And remember, a little debt is OK, as long as your income can support it. A whole lot of debt is terrible, especially if you continue to spend beyond your means.

 

When did I say that!

What I said was, Bush used the tool of government spending to try to help the economy out of a recession. I never said that was the only way, or even the best way to achieve that short term goal. As far as it being a long term solution, I believe quite the opposite. I believe that government spending should be reduced once the economy has recovered.

You are correct that if I actually believed the Federal government could spend mony more wisely than the private sector, I would be a Democrat, but I do not believe that to be the case.

 

The president has many, many tools available to him. But they are not all easy to implement and some have bad side effects. The bigest tool he has used is to massivly increase the money supply. But if there is the slightest crisis of faith in America by foreign investors, it would be very bad indeed.

 

No it didn't.

 

You are correct that non-government occurences have a huge effect on the economy, and that is why the Government shold try to behave coutercyclical in order to temper those cycles. It would not have made sense to cut spending and raise taxes, just as things were starting to go bad in the private sector.

That is why it was such a shame that Clinton did not use his time of prosperity to sharply curtail non-military government spending. If he had done that, Bush would have had more room to work with to try to fight the recession when it started.

I do not want that to appear partisan, because I have no confidence that Bush will curb spending when the economy picks up if he is re-elected.

As far as a "little debt", we need to make sure we have a perspective on what "little" is. It definitely needs to be related to GDP, not just absolute dollars. As a percentage of GDP our current debt is not unreasonably high.

 

While I aqgree that monitary policy is another tool,
the last I looked, the president was not the Chairman of the Federal Reserve.

 

I will try and look at it objectively. I give Clinton a lot of credit for fighting of the extreme left in his party, and holding the line on spending as much as he did, but I think he could have done more.

I think a case can be made that it was good policy for Bush to cut taxes and increase spending when the economy was having trouble pulling out of the recession.

Would I have cut taxes the exact way he did, or increased spending the exact way he did? Probably not, but I don't understand how people can attack him a strongly as they have.

People often forget about the other side of the coin. Thje wealthy in this country also pay the largest share of taxes. the fact of the matter is, any broad based tax cut, is bound to give more relief to the rich. In general I am not going to begrudge them some tax relief also.

 

No, but Fed Chair is a political appointee. They cooperate.

Current rate of defiicit spending is 3.5% per year, as a portion of GDP. This will probably run between 3-5% for the next ten years, if the Bush economic doctrine is maintained. This means a debt burden of $4-5 trillion, which will become due at some point. The size of the economy is almost $10 trillion today, with low-to-nominal growth forecast if the Bush doctrine is maintained. Absurd as it might seem, most of our tax payments in 2013 would be to pay our creditors, not defense or social welfare.

Reagan raised taxes in his second term, and Bush the Elder followed up with additiional tax increases. Also, the deficits in the early '80s were run up with a so-called strong dollar policy. By the late '80s, the dollar had dropped in value. Borrow expensive dollars, pay back with cheap dollars. It turns out this was not a sustainable policy, hence we got President Clinton.

 

Well, we have the same chairman as we did under Clinton, and yet the policy changed. I guess it all may be some kind of strange and wild coincidence. Too bad Bush does not have enough power to control those under him.

 

This is where I point out that RR cut taxes in '81 and created a recesssion, then raised taxes each of the next two years and created prosperity.

OK, I'm inferring the causal relationship there.

 

Even if I accept this "de facto flat tax rate"

What percentage of the total tax revenue would your 18% be compared to Bills 18%?

So if you both got a 1% tax cut, and we compared that cut, don't you think the liberals would point to the huge differance in the amount of Dollars that Bill gates would save realtive to you, and say the cut unfairly favored the wealthy?

 

18% of $40 billion (I'm just gussing what the man may make) is $7.2 billion. That's a lot, but leaves ONE PERSON with $32.8 billion to spend in ONE YEAR.

On the other side of the coin, as you say, a person who makes $28,000 a year pays $5,000 in taxes. Leaving them with with $23,000. Okay, who's going to be hurting more? Not the rich man.

What's a rich man going to with the extra $1.2 billion, if you cut his taxes 3%, that he's not already doing with that $32.8 billion? Seriously, at some point people DO NOT NEED more money. They may think they do, but they really don't.

It's like the Eddie Murphy "Bitch gets half routine". You lose half of $40 million you're going to be ok. You lose half of $30,000 you're going to be crying.

 

This number was as high as 30.3% in 1943. Of course that was related to the war, but it was also 4.2% in 1976.

What are you basing that assumption on? If the economy turns around that number could easily go to 1.5%

Of course predicting the future is a difficult task, but this sonds like a very negative forecast? What is the source of your information.

Numbers that I got from the budget office show an interest payment of 1.8% of GDP for 2008 and a military expenditure of 3.3% of GDP.

 

The Economist. A good, mid-range forecaster. Very prescient. If you haven't read them, you should.

The budget office is full of crap. They are required by law to provide very unrealistic numbers. Too rosy.

If you want to see a forecast through crap-colored glasses, check these guys out.

http://www.ctj.org/pdf/binge03.pdf

 

Well can you point me to your source for this claim?

The IRS reported that in 2001 the top 1% of tax filers payed a rate of 27.5% and payed 33.89% of the entire income taxes payed.

The top 50% payed a rate of 15.85% and payed 96.03% of all taxes payed.

that means the bottom half of tax payers only payed 3.97% of all taxes.

So you think you payed the same amount of dollars in taxes as Bill gates?

No, Bill gates got a bigger percentage of the tax cut than you did, but that is only because he payed a larger percentage of the taxes in the first place.

Prove that to me. Even if you had the same tax rate, the standard deduction would be such a larger proportion of you income, that the effective rate for you would be much lower than for him. The only way Bill could make up for that would be some huge deductions, that I am not aware of.

 

Michael,

I understand economics slightly better than a garden slug, and even I can tell that you don't know what you're talking about.